The DuMont fine decision – new risks for press cooperations?
Classic print media publishers are under enormous pressure in today's media landscape due to the steadily increasing popularity of online media formats. To strengthen press publishers in intermedia competition antitrust privileges were introduced for press publishers in Germany last year. According to these privileges, press publishers may enter into certain cooperations with each other, which would otherwise be prohibited under antitrust law. However promising the regulation of section 30 para 2 lit. b) of the German Act Against Restraints of Competition (ARC) may sound, cooperations between press publishers have to be drafted with extreme caution, as the current DuMont case shows. The media group was recently fined EUR 16m by the German Federal Cartel Office, due to concluding illegal territorial agreements with the Bonner Generalanzeiger media group.
Legal privileges for press publishers
Due to the privileged treatment provided for in section 30 para 2 lit. b) ARC - introduced in the context of the 9th Amendment to the ARC (see here) - such agreements on cooperation in the publishing sector which enable the parties to strengthen their economic basis for intermedia competition are now exempted from the prohibition of cartels. However, the terms “publishing” and “enabling the strengthening of their economic basis for intermedia competition” were not defined in more detail by this legislation.
The introduction of this new rule was anything but uncontroversial also due to its potentially very broad scope of application. The Federal Cartel Office also criticised this fact by pointing out that the privileged treatment could even be understood to mean that so-called “hardcore” cartel infringements such as price or territorial agreements fall under section 30 para 2 lit b) ARC as well.
The DuMont fine decision
In its decision in the DuMont case the Federal Cartel Office addressed such a territorial agreement and therefore fined the DuMont media group EUR 16m (the press release of the Federal Cartel Office can be found here). Despite the fact that the period under investigation was before the introduction of the new exemption for press publishers, so that it was not yet applicable, the Federal Cartel Office pointed out that pure price, territorial and customer agreements are not exempted from the cartel prohibition even under the new exemption provision.
The decision caused a sensation mainly due to the curious facts of the case, i.e. the agreement contrary to antitrust law had been concluded at a notary in Switzerland in order to conceal it, as well as the fact that the fine was also imposed on the advising lawyer. The decision, however, also raises the question of what conduct is still permitted for press publishers and when - as in the case of DuMont - this threshold has obviously been crossed.
What is certain is that the cooperation must enable the participants to strengthen their economic basis and thus their competitiveness for intermedia competition. What this means in concrete terms and whether it might be sufficient for the cooperation to serve only to maximise profits has not yet been clarified. In any case, the explanatory memorandum to the law indicates a narrower understanding, namely that any cooperation that serves to rationalise and create synergies in publishing activities should be privileged.
In light of this, the Federal Cartel Office’s case report, which will be published shortly, is eagerly awaited. Even if the exception is not directly applicable to the DuMont case, it is to be hoped that the case report will provide further information on its scope from the Federal Cartel Office’s point of view.
Considerable uncertainty still remains for press companies if they want to make use of the new exemption.
On the one hand, it must be borne in mind that the exemption only applies to purely German situations. As soon as a cooperation can also have effects on trade between Member States in the European Union, the European prohibition of cartels pursuant to Article 101 para 1 TFEU would apply without restriction.
For this reason, there is already a risk for press publishers operating Germany-wide that practices that comply with antitrust law under the new German exemption regulation will be illegal based on the European cartel prohibition as soon as trade between Member States can be affected.
Therefore, regionally active press publishers, for whom an impairment of trade between Member States is generally out of the question, would appear to be the main beneficiaries of the new German exemption. But even here, there is a threat of antitrust risks, too: If local or regional markets are assumed, the antitrust issue of a dominant market position and thus abuse of dominance issues easily become relevant.
In order to increase legal certainty for the press publishers involved, section 30 para 2 lit b) sentence 3 ARC provides for a claim to a so-called “No Grounds for Action” decision by the competition authority pursuant to section 32c ARC if there is a considerable legal and economic interest in such a decision. Under this rule, companies have the opportunity to have the admissibility of a cooperation confirmed by the Federal Cartel Office.
Due to the numerous uncertainties in the application of the law, press publishers should carefully examine in advance and under the guidance of a lawyer what opportunities and risks may arise from any intended cooperation.
Any Questions? Please contact: Sarah Blazek or Patrick Kalina
Practice Groups: Antitrust & Competition and Regulatory & Governmental Affairs